NCLAT Refuses to Entertain ₹13.6 Cr GST Claim Filed After Resolution Plan Approval [Read Order]

The Appellate Tribunal held that allowing such late-stage claims, especially after the resolution plan has already been implemented, would not only derail the Corporate Insolvency Resolution Process (CIRP) but also undermine the objectives of the IBC framework.

The Corporate Debtor, Radiant Castings Private Limited, a manufacturing company undergoing insolvency proceedings, had its resolution plan approved by the Committee of Creditors (CoC) in May 2023, with over 70% voting in favour. The National Company Law Tribunal (NCLT), New Delhi Bench, subsequently approved the plan on August 30, 2023.

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During CIRP, the State Taxes and Excise Department of Himachal Pradesh submitted a claim of ₹2.61 crore, which was partially admitted. Under the approved resolution plan, the Department was allocated a payment of ₹50,309 as “Government Dues,” which it received on September 9, 2023.

The Department later contended that it was owed an additional ₹13.6 crore in pending tax arrears and claimed this amount had not been properly factored into the resolution plan. Terming the plan as “unjust and inequitable,” the Department filed an application seeking recall of the NCLT’s approval order, demanding a fair redistribution of funds.

The Tribunal wasn’t convinced. It ruled that the Department had every opportunity to file the full claim during the CIRP, but failed to do so. Although two emails referring to the ₹13.6 crore dues were sent to the Resolution Professional, no formal claim was ever filed in the prescribed format or within the deadline.

The NCLAT observed that the Insolvency Resolution Professional had acted strictly in accordance with the IBC and CIRP Regulations, and there was no procedural irregularity in how claims were invited and assessed. The delay, it said, was solely attributable to the Department’s own inaction.

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The Appellate Tribunal also asserted that recall or review of an order can only be permitted in cases where the order was passed without jurisdiction, the party was not served notice, or the order was obtained by fraud or misrepresentation. None of these conditions were met in the present case.

The bench noted that once a resolution plan is approved and implemented, it becomes binding on all stakeholders, including government authorities, under Section 31 of the IBC. Reopening such plans due to late claims would not only be legally untenable but would also disrupt the entire insolvency process.

The Department tried to draw support from the Supreme Court’s decision in State Tax Officer v. Rainbow Papers, which had held that certain government claims could enjoy secured creditor status. But the NCLAT pointed out that the Rainbow Papers case was based on the Gujarat VAT Act, which had an overriding clause.

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It was held that Himachal Pradesh GST Act does not override the IBC. In fact, Section 82 of the CGST/HPGST Act explicitly defers to the IBC in case of conflict. The Tribunal further relied on the Supreme Court’s decision in Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat, which clarified that government dues rank lower in the waterfall mechanism under Section 53 of the IBC.

The three-member bench comprising JusticeAshok Bhushan (Chairperson), Barun Mitra (Technical Member), and Arun Baroka (Technical Member), noted that the approved resolution plan had already been substantially implemented, and the Department had received more than its liquidation value entitlement.

Holding that the Department was trying to indirectly review an approved resolution plan under the disguise of a recall application, the Tribunal dismissed the appeal, observing that such a move would open the floodgates for other creditors to bring in delayed claims.

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